Based on Neoclassical economics, this statement is faulty because the employees provide their marginal unit of service by providing the kind of labor that their companies need to their loss of leisure. Almost all CEOs are the most stressed out employees of a company because they carry the burden to run the company.
2. This statement is faulty because the consumers are maximizing their utilities and the producers are maximizing their profits. In this statement, the demand for bottled water is greater than the demand for gasoline. Therefore, the production cost of the bottled water is greater than the production of gasoline.
3. Neoclassical economics focuses on the satisfaction of the consumers. Consumers have the preferences on whether they will stop smoking or continue to smoke. Therefore, their addiction to nicotine has no direct relationship with the increase in taxes.
4. This statement is not true because the firms will only employ people when the cost for hiring them is balanced with their outputs.
5. This statement is not true because the law for supply and demand does not apply to everyday lives. When there is a shortage in parking lots, the university will then put a price in the parking area as the solution to the problem. The students will then “bid” for their spaces in the parking lots. This is because the university will strive to optimize their market interdependence and to achieve economic equilibrium.
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Topic: Faulty economics
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